First Solar Inc. (FSLR) declined nearly 20% after disclosing unexpectedly low sales figures in its FY 2012 guidance. The stock hit its 52-week low in the afternoon. Jim Chanos, the founder of Kynikos Associates, foresaw First Solar’s decline in his May presentation at the Ira Sohn Conference, according to Business Insider.
Jim Chanos pointed out that last year First Solar experienced a quality deterioration issue in the field, which would “require a substantial cost to fix the problem.” The company won less business in Europe – the largest solar market in the world, and its customers were reducing commitment levels. Despite the bad balance sheet, First Solar’s top managers either departed or took lesser roles, while new members lacked enough experience in the industry. Moreover, several insiders also sold significant shakes from their positions.